New River Medical Center officials, board members address affiliation status

Published October 11, 2012 at 12:38 pm

Earlier this year, New River Medical Center’s non-profit board established a task force to weigh the pros and cons of affiliating with a larger health system.
Hospital board members were scheduled to learn more about potential 501c3 leasing partners Thursday during CEO Marshall Smith’s task force report.
The task force has reviewed information and presentations from Allina, CentraCare, Fairview and North Memorial, said Joni Pawelk, director of marketing.
Pawelk confirmed this week Mayo Health System and Sanford Health have declined participation in the non-profit affiliation task force presentation process.
“We’ve completed the first round of interviews,” Pawlek said Tuesday during a background meeting with local media. “There will be an update Thursday.”
Smith, Board Chairman Ervin Danielowski and Boardmember Sheldon Johnson also attended the meeting, which featured a discussion of the 501c3 process.
Danielowski said the board is talking to possible alignment partners that are willing to bring investment dollars and time to help revive the hospital financially. “Everyone knows we are looking for an alignment partner right now,” Danielowski said Tuesday.
“I would have been very happy to have started looking a year ago. The Sleep Center closing, the OB-GYN situation with the Level II nursery, all of those things will be taken care of after we find an alignment partner.”
Smith said the non-profit board has a responsibility to move forward to ensure the hospital’s future. Board members approved the 501c3 change on Jan. 5.
“We have a hospital in this community that’s trying to compete with big hospital systems all around us,” he said. “While this district was always presenting everything to the general public, the 501c3 allows us to be like the big hospitals, where we can strategically manage our hospital through [private] governance.”
According to Smith, most of the 5,700 hospitals across America are non-profits. “Our partners and competitors can’t be one and the same,” Smith added.
Danielowski originally argued against the 501c3, he said, because he wanted New River Medical Center to align with another system.
“You can’t complete the alignment process until your partner decides the 501c3 transaction process,” Danielowski said. “I was not against the 501c3. I was against us doing it.”
Smith said the larger health systems he consulted with recommended New River get its house in order so when it’s time for alignment, the selected partner can quickly share business and marketing strategies. “That’s done behind closed doors not for the purpose of secrecy, but for planning effectively,” Smith said.
Danielowski added: “You have to remember the hospitals we’ve talked to don’t want us to talk about their presentations. They are competing for this hospital.”
“We are not going to change any of our contracts or employee benefits until we get our IRS letter,” he said “That letter changes how we do our business.”
According to Smith, it took the Sauk Centre hospital board 15 months to get its letter. New River could expect its letter in April 2013 according to that timeline.
Danielowski said an affiliation partner could come in and replace CEO Marshall Smith. “He knows that. Maybe they will move him to another part of the system. One of the must-haves we put out there [when we started meeting with other systems] is that our affiliation partner must guarantee our debt.”
The New River Medical Center Board of Directors certified a $1.5 million 2013 hospital district tax levy Sept. 13.
Hospital board members also approved a budget for the next fiscal year that contains a huge shortfall. District officials estimate 2013 operating losses at $11.3 million, with a total loss of $11.7 million.
During Tuesday’s meeting, Johnson provided an update regarding a recent meeting he had with eight doctors from the Monticello Clinic’s executive group.
“I don’t look at them [the doctors] being on one side of the table and us on the other and never the two shall meet. They need us and we need them,” he said.
According to Johnson, he and the doctors met a week ago, and he made it a point during their discussion to mention the affiliation process was approaching.
“My reason for saying yes to being on the board was to do everything I can to make sure this is a viable and profitable institution,” he said.
“We had a good meeting. With Marshall [Smith] or without, they said they will come to the table and help with this transition. I wrote that down. That’s a big thing, and a start.”